On November 29, 2010, the New York State Assembly passed a bill imposing a state-wide moratorium on new authorizations for hydraulic fracturing. An identical bill was passed in the New York State Senate in August. The bill, which has been sent to Governor Paterson for signing, suspends until May 15, 2011 the issuance of new permits "for the drilling of a well which utilizes the practice of hydraulic fracturing for the purpose of stimulating natural gas or oil in low permeability natural gas reservoirs, such as the Marcellus and Utica shale formations."

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The purpose of the moratorium is to "afford the state and its residents the opportunity to continue the review and analysis of the effects of hydraulic fracturing on water and air quality, environmental safety and public health."

Hydraulic fracturing uses high-pressured water, combined with chemicals, to release natural gas present underground in shale formations. The use or proposed use of this process has raised concerns across the country that this process has contaminated, or will contaminate, drinking water supplies. Both the New York State Department of Environmental Conservation ("DEC") and the federal Environmental Protection Agency ("EPA") are currently undertaking studies of the environmental impacts of hydraulic fracturing.

However, the EPA study will not be complete by the end of the moratorium, and the DEC study may not be complete by then either.

As might be expected, several environmental advocacy groups praised the moratorium, while representatives from the natural gas industry criticized it, stating that it would jeopardize jobs and state tax revenue and noting that natural gas companies would first seek to drill in states that could offer a more "hospitable" regulatory environment.